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tv   [untitled]    January 28, 2011 10:00am-10:30am PST

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glad to use that and provide it to our 26 agencies so they can provide it to their customers as well. >> thank you, mr. jensen. that was very helpful. commissioners, any comments on mr. jensen's report? hearing none, next item, please. >> the next item is the consent calendar. all matters listed under consent calendar are considered routine by the san francisco public utilities commission and will be acted on by a single vote. approval an amendment to the power enterprise project fund agreement on a renewable and advance energy services with aepc group, increasing the amendment with a time extension of one year to continue to support renewable and advanced energy generation technologies and related project. b, approved terms and
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conditions and authorize the general manager to execute a new five-year lease for existing telecommunications with t mobile west corporation for $48,600 annually for installation of mobile/wireless antennas and radio equipment. c, approve the terms and conditions and authorize the general manager to execute a new five-year lease for an existing telecommunications site with t mobile for wireless and mobile antennas related to radio communications signals. d, approve the terms and conditions and authorize the general manager to execute a new five-year lease at the crystal
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springs cottage site for the installation of radio equipment used for the transmission and reception of radio communication signals on watershed land. e, approve the plans to install a 60-inch steel water main on 28th avenue. f, approve the plans and specifications to award the contract for north shore and mariposa pump station to the lowest responsibility -- responsive bitter -- bidder.
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does any commissioner wish to separate any item from this? president vietor: any items to remove from the consent calendar? is there any comment from the consent calendar? all those in favor? opposed? the motion carries. next item. >> the next item begins the regular calendar. i contend, discussion and possible action to approve a community benefits policy that will provide the framework to develop an agency-wide comprehensive community benefits program. >> hello, commissioners. juliet ellis. i think this is my first presentation for you on this site. i am the general manager for external affairs. i want to welcome commissioner martin. i am glad you're here. i contend should be familiar to
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most of you. -- item 10 should be familiar to most of you. this came before you at your commission meeting on november 23 in draft form. as background for commissioner courtney, in late 2009, the commission directed the staff at the public utilities commission to develop a community benefits program, a comprehensive program and policy. shortly after that meeting in 2009, two consultants who had been working with us for the past year began assessing where the public utilities commission is with respect to community benefits programs, helping us develop a definition we used in the development of the policy before you today. at the meeting on november 23, we also provided the wall with an executive summary of the draft report -- provided you all with an executive summary of the
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draft report we had been working on around community benefits. that report will be finalized and released in february. since the meeting in november, we incorporated a lot of the comments that we received at that meeting, and specific comments around incorporating language in the policy with regards to implementation of the environmental justice policy. that has been included. there are a couple of other comments that were presented at that meeting that have been incorporated. our next step upon approval of the policy will be to take that and hit the ground running in developing a comprehensive community benefits program and staffing up with that. that will be used as we think about how to put some meat on the bones around the policy with regard to implementation. in the last couple of days, there have been questions raised with regards to the policy. it has been noticed and people
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have seen it again. one question we wanted to respond to was a question around how we will operationalize the triple bottom-line approach referred to in the policy. this also speaks really well to the comments that were provided about how we think about measuring and communicating what the impact is and the taurus is we are making between economic benefit -- and the choices we are making between economic benefit and community benefit and environmental benefit. the question is how you create a framework so commissioners can make choices. it will be around making choices with regard to how we way economic benefit, environmental benefit, and equity benefit. how do we find the sweet spot in the middle where we are getting all three of those goals? internally, we are talking about implementation. that is where we are. the question about how to
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operationalize the triple bottom-line approach -- it is important. it is front and center. as we develop the program, we are monitoring, evaluating, and prioritizing to create tools and tables to be able to list the concepts set forth in the policy. the other area that has been discussed and highlighted as critical is, for example, the implementation of the environmental justice program approved in 2009. the community benefits program would give us a vehicle to be able to think about implementation. many organizations talk about environmental justice. the question within the puc staff is what that actually means for day-to-day work. for the commission, the question that comes back to me is when are you going to start implementing it. what does it mean for the decisions we make, the programs we do, and the activities we
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support? those would be quick responses to one question and has been around how we think about implementation. the other question that came in this week was the role that community-based organizations are going to have as we think about community benefits. in the resolutions, we refer to stakeholders and stakeholder engagement. we do not specifically call out community-based organizations. that has caused some concern with community-based partners. in response to that, i just want to take the opportunity to say as we think about stakeholders' we include community-based organizations as stakeholders. we did not specifically call out community-based organizations because we also understand there are individuals, residents, and ratepayers attached to organizations, whether they are community organizations or nonprofits. we are talking about the broad
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family of stakeholders who have skin in the game and are going to be impacted. we want to find all the different ways we can reach out to those constituents. folks who are watching in the audience today -- that includes community-based organizations. whether they are churches or local partners on the ground, we are going to incorporate their feedback in this resolution and identify ways of beginning to work with them immediately. with that, i will stop. you have seen this many times before. i will respond to questions if you have them. president vietor: i have one question on this implementation. will we be hearing in our budget proceedings about what is going to cost, and the staffing needs to implement it? >> yes. i think the external affairs apartment -- external affairs department is up on the 27. we have been having intensive
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conversations with the general manager as well as assistant general managers. the great thing about the community benefits program is that it is comprehensive and hits different enterprises. the idea is, for example, as assistant general manager hale is thinking about issues around power and funds coming into the agency that will need to support disadvantaged communities, she will be working with external affairs and the community benefits team to have thus provide leadership about how to do that programming. as we think about the sewer system improvement program, there will be a community benefits approach and strategy. it is not just about new benefits. it is about how to engage the public as we think about what the impact is going to be, and how we think about our citizens advisory committee. we will be coming forward to you with some budget implications,
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but we have also been trying to think creatively about how to fund the work, knowing that revenues are down within the agency. the truth is we are starting at ground zero at this point. who is going to write the policy? we do not have anyone staffed up because the new program has not yet been approved. we're hoping to staff up in a way that is smart and takes into account what the revenue issues are, but also is realistic with regards to what has to take place in those limitations. vice president moran: thank you for that. it is incredibly timely. i was noticing at our december meeting that we had two or three items that talked about the triple bottom line. [laughter] and it made me start thinking about what we really mean by that. what we mean by it gets defined
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as we figure out how to describe it and quantify it and act on it. the closest parallel i think we have had experience with is in need -- in the mtd area. we said in contracting we wanted the lowest priced bid, but on the other hand we encourage small local hiring. over a considerable time, we developed a way of thinking about that. we said this is work -- is worth up to a certain percentage of the price, but not for huge contracts, and only can qualify after review criteria. and that is not directly applicable here. this issue is much more complicated than just bid preferences. but there are two things i think might be applicable.
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one is that in the evolution of that process a lot of thinking and discussion and decision making was made. it was not just how to presented. it was, credit we should give and to what kind of firms. -- it was a question of how much credit we should give and to what kind of firms. i am thinking that someone has yet to go through and figure out what the triple bottom line is. the other thing that came out of this is easy to understand. in that sense, it is very transparent. you can explain it to people. you can argue about it. but you get the point very quickly. as we get into a triple bottom line, there may be a tendency to get very complicated trying to internalize the economic costs. it is a very hard thing to do, and even harder to explain. i would encourage two things.
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one is that we try to go toward a straightforward and easy to understand methodology, and that we use the development process as a way of encouraging discussion at the commission level as to what we really mean by that and how we will think about the applications. president vietor: thank you, commissioner moran. any other questions or comments? this is a potential action item. is there a motion to adopt at this time the community benefits policy? >> i will move. >> second. president vietor: any comments or questions on this? it would be great to take public comment at this time if there is any public comment on the community benefits policy. >> commissioners, i wanted to
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speak in favor of the policy. as most of the commission knows and is aware, over the past year this has been the product of an incredible amount of work. there have been stakeholder meetings with environmental groups, community groups, and job applicants. a lot of us. it has been very capable. with former commissioner ellis and your general manager consultants, there has been a lot of discussion about this. it is a robust policy. it gets us to a lot of the goals that are seeking to be advanced in terms of leveraging all the opportunities for community empowerment that are available. when you spend the type of resources the puc is spending to improve things like our waste water system rebuild, $3 billion to $4 billion, it is massive. i think there is a lot of
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reassurance. we have a general manager that believes in this. i was one of many people who was delighted to see general manager harrington stand up in support of general hiring at the board of supervisors. that was really important. i cannot reiterate too much how important it was to have that. we have someone who believes in this at the helm of this agency, a commission that believes in, from our point of view, the importance of leveraging community-based job opportunities that are good paying, high-quality jobs with benefits -- it is important. again, i want to speak in favor. i think there are a lot of things we can do with this. we talked about once there is a local hiring policy in place, let's move forward with agreement for the waste water system. there are a lot of good things
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to accomplish to that. with mandatory local hiring, that a switch is the concern of a year ago, when -- that us wages -- that assuages the concern of a year ago, when there was a question of whether to move forward. there is a lot we can do. this is a great commission. it will be great to implement this. i look forward to working with the commission. president vietor: thank you for your comments. is there any other public comment on this item? hearing none, all those in favor? opposed? congratulations. we are very excited about this policy and look forward to working with you. next item, please. >> item 11, presentation and discussion of the independent rate consultant's report regarding the cost of service studies for retail electric power utilities, discussion of
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proposed schedules of electric power rates and charges for the san francisco power enterprise to its retail customers in san francisco, and discussion of miscellaneous fees and charges for services provided by san francisco power enterprise to go into effect 30 days following adoption. >> hello again. todd rydstrom, assistant general manager and cfo. we will also be discussing item 12. >> item 12, presentation and discussion of the rate fairness board report on proposed retail power rates. >> this summarizes our power operation, specifically during our last summer's retreat at the commission. many of the questions i know commissioners caen, vietor, and moran aksked was to review the rates for business operations.
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we have done that. we have taken the operating budget you have adopted as well as the 10-year financial plan and capital needs and looked at those portfolios. but general manager hale and myself have been looking at revenue requirements for power operation as a whole what our attributed allocations are to streetlights, general fund customers, new customers you're going to hear more about today, redevelopment areas, and retail power rates, and to look at a fair cost allocation of those charges. we have a very efficient power system. it is very well run. we are the beneficiaries of a power system that provides a very low-cost clean greenhouse gas free emissions. in addition, we have our own solar power generation coming
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online as well. today, we have three parts of the presentation. we have three slides -- we have nine slides from our independent rate consultant. under the charter, we are required at least every five years to do an independent rate review by an independent consultant based on cost of service. this is satisfying that charter requirement. in addition, we take that information and put that into what would be proposed retail rates. these are the rates specifically for the redevelopment area, not the general fund or enterprise fund. we will discuss that at your budget hearing. the deputy cfo will walk you through the slides from the staff proposal. lastly, we are joined today by mr. howard ashe, chairman of
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the rate fairness board. the have gone two hours of review of the analysis of the projected operational needs. he is here today to provide their opinion on the rate fairness evaluation of the staff proposal and the san francisco public utilities power operations approach to proposed rate setting. chairman ashe will provide that summary. i will turn it over to mr. frank perdue from montague. >> good afternoon. i will cover a few of the affected -- president vietor: if you would not mind introducing yourself. >> frank perdue from montague and associates. i will talk about the objectives of the study and what we set out to do in the results of the
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study. i also want to provide a few points that were already mentioned by mr. rydstrom about the quality of the utility and its costs compared with other utilities. with regard to objectives, the first step really is to establish the total costs of the power enterprise. we developed a model to address that. secondly, it is to allocate those costs to customer groups and categories. part of that process is using a revenue requirement model, what we call an enterprise model. we look at the whole power enterprise, its production cost, its financial cost, and understand the drivers of those costs. we feel in our work it is important to stress the cost and revenues. we work with power enterprise to do that. when i say we stress test revenues and costs, i am talking about what mr. harrington talked
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about. right now, you have a very high water year. you want to know what that does to revenues or city's sales. at other times, you have a very low water year. you want to know what that does to revenues or costs. we work with power enterprise to do that. the model we developed with them involves setting rates for irrigation districts. you know the long-term capital plan costs. probably most importantly is when you serve electricity customers in the redevelopment areas, area, and understanding of what the costs are on an actual basis and the revenues, we build that into the model. as was mentioned, the goal was to get this to the development areas. just really two points on this slide. one was stated, we you have a carbon free resources.
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these surrounding resources do not have that. because of those, you have a very low costs. if you look at the main points, the costs for the power enterprise averages about 9 cents per kilowatt hour which is very low. pg&e has costs that are much higher, about 15 cents per kilowatt hour. in santa clara, this part of the power authority, they have low costs supplied as well. they have very low costs: 9.4 cents per kilowatt hour. a couple of.
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secundus slide. this is the overall process. this is a revenue requirement. what we tried to do is to take those costs and which are the power supplier costs. after that is done, we try to put that into categories such as energy capacity and a customer charge would be like the bills. after the step is finished, that is allocated to customers. the main focus of this
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presentation at a study was the redevelopment area. to get up the costs, we had to do it and enterprise approach to break out the cost attributable to the redevelopment area. here on slight four which is before you, i will focus in on a couple of areas. the first day it is cost analysis. the enterprise has a total cost of service of approximately $95 million. this is before revenue comes in for enterprise customers but the total price averages over the
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five-year is setting. . this is different than customer categories and you see the average cost of service. the costs are about 9 cents and you see this at the bottom. when you see customer groups have different costs. you see the residential customers in the area which have a cause greater than 9 cents. the reason for that i might take you back to the slide about the general fund, the load is very flat. the cost to serve is typically lower than the cost to serve of payload that has a shape to it.
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if you take the highest demand slashthe average energy, the percentages like 5% where as your municipal customers are much much lower. there is a cost which is higher than 9 cents. there are also some customer costs. the other out lighter here is about having a very high cost and the reason is the capital association which was allocated directly to the customer category. as i have stated, this was a collaborative of effort with the power enterprise. we examined several different options to setting residential
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rates after we went through the cost of service steady. option one and two, what these are all customers save for the energy. then there is kind of a progression where we look at the grids which typically provide a price signal so that customers can surf. this is the recommended option that we came up with. i want to walk through this a little bit. the customer charges $4 which each customer would pay. you would see kilowatt hours of use and you see three tiers theie


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